Wednesday, October 1, 2014

Dems Are About To Get Klobbered By Keystone

Talking to local wheat farmers a while back I heard a lot of grousing about lack of railroad service. Grain was piling up because, in their view, railroad assets are being hogged by oil shippers up north. The most common complaint was about the delays in getting the Keystone XL pipeline into place, giving that northern oil, principally from North Dakota, an outlet that would relieve the strain on railroads. Their thinking is that if KXL existed, it would allow rail service in this part of the country to get back to its pre-oil boom status as the means by which farmers could get their products to market. I made note of it here a couple of months ago, predicting that as the Fall harvest of row crops, mainly corn and soybeans, got underway, the complaints would only get louder. Because the focus of those complaints has been on KXL, I didn't doubt that the already politicized issue would get even thornier for South Dakota Dems. Corinna Robinson, running for the U.S. House seat, has been unequivocally opposed. So has Rick Weiland, who's running for the U.S. Senate. I think they're both politically tone-deaf on this issue, and it's likely to cost them, big time. First off, confident as I've been that most South Dakotans favor KXL, I was astounded nonetheless by some polling results that were published in Todd Epp's excellent and informative Northern Plains News this morning. Nielson Brothers Polling tells us that South Dakotans favor constructing the pipeline by a nearly 3-to-1 margin. And this is before a humongous harvest of corn and soybeans has even gotten underway. Pubs--either by design or circumstance--are about to get a political windfall from this huge margin of support, mainly because backed up harvests will show up front and center throughout the region's media in coming weeks. SD Senator John Thune just co-signed a bi-partisan letter to the USDA looking for some help on relieving the rail backlog, noting in the letter that the matter is critical "as we enter the Fall harvest, which is projected to be record-setting." Can you see my scenario materializing?A few weeks ago Thune also introduced a bill that would strengthen the Surface Transportation Board's investigative and review authority over railroads with the aim of freeing up their trains for work in South Dakota and other farm belt states. Believe me, the irony of a pol who complains about "power grabs" by federal agencies and their excessive, burdensome government regulations all-of-a-sudden calling on a federal agency to increase its power and authority over the railroad industry doesn't escape me. Nor should it escape you.But that glaring inconsistency notwithstanding, it should be plenty obvious that Pubs are about to make some political hay out of the real stuff. Dems who oppose KXL--soundness of their reasons or not--will be characterized as economic obstructionists, even as the whole schema of rail shortages and grain surpluses plays right into Republican hands. That 3 times as many South Dakotans support KXL as oppose it will only make the Republican pitch about as easy as a Bible-thumper preaching to his choir. Do I get an "amen?"

Disclaimer, added on 10/4/14: I own commercial property close enough to the proposed KXL route to get some benefit from its construction. Transitory and marginal as it will be, a gain is a gain, so my readers should know that I'm not entireley disinterested in this matter.

Sadly building the KXL pipeline will not relieve pressure on the railroads hauling Bakken crude. The KXL is intended to ship tar sands tar and any promises to haul Bakken crude are BS intended to fool the public into supporting something that isn't what they think it is.

This is political reality. The pipeline does nothing for South Dakota, either long term or medium term. It's just another form of flyover, in the sense that foreigners use our space, paying peanuts for compensation, while any gain to us is tiny. Opponents (me included) have failed to make the message persuasive. This is an issue that will hurt Dems in November. What is the response in the Senate race, where we see two very competent people running against an incompetent and probably corrupt ex-Governor? To me, keeping Rounds out of the Senate is much more important than who gets in to the Senate. Who should I support?

"John Thune, Kristi Noem and Michael Rounds have each received tens of thousands of dollars from big oil, big coal, railroads, and various trade associations. Such campaign contributions are accompanied by expectations that the recipients serve and protect contributor interests. The electorate’s interests aren’t exactly a priority when elections are so easily bought by outside interests."

Keystone may be less important right now in light of Rounds' tacit admission in this KELO interview that he did in fact know that Joop was taking EB-5 private and into his own LLC--Characteristically, Mike says it is the Board of Regents' and Benda's fault. http://www.keloland.com/newsdetail.cfm/rounds-i-was-told-bollen-was-the-man-to-run-eb-5/?id=170127

Keystone XL has never committed to shipping more than 10% Bakkan oil. In the 6 years since the original proposal, North Dakota says they no longer need KXL, as they have developed other alternatives. That still leaves 90% of ND's oil on rail; even if KXL gets built. KXL is a Canadian export pipeline to get their product to an ocean port, where it can be refined and sold over seas. It will not reduce our gas prices one bit. The only thing it will give us is the risk of a major spill that Kalamazoo Michigan has shown is almost impossible to clean up.

About Me

I'm a businessman and writer living in the Black Hills of South Dakota. I've written articles and commentary for 25+ years. I was a member of the Chicago Board Options Exchange and the founder of a futures brokerage firm for a total of twenty years and I own commercial real estate in western South Dakota. I served three years ('66-'69) in the U.S. Marine Corps, including a 13-month tour of duty in Vietnam as a radioman. My wife and I have two grown daughters. We make our home in Rapid City, South Dakota